Beyond highly developed pharma markets! Wild card access to less explored, high entry barrier territories

In the ever-changing landscape of the pharma industry, we have witnessed a prolonged focus on the ‘developed markets’ by most of the growing pharma manufacturing companies from India. These are those coveted group of countries characterised by high spending capacity, stringent quality standards, well-established healthcare systems and open to globalisation. Although it is a fluid list generally, the US, Western Europe, Australia, Canada etc., are considered worthy participants of this list.

Undoubtedly it has turned out to be a winning strategy and it is reflected through tremendous value creation seen in the last decade by Indian pharma industry (Refer Chart 1). Today, India exports almost 60 per cent of the generic drugs consumed in the US and Europe and has the largest concentration of USFDA and EUGMP approved manufacturing facilities across the globe.

When the trailblazers, who started exporting to developed markets in the early 2000s, were followed closely by their peers. Within a decade after that, this market became a competitive space inching towards saturation for usual generic medicines. In parallel to manufacturing capacity, a strong R&D capability was built focusing on generic product development. The early 2000s was a time when Para IV filing and 180-day exclusivities were rare events. It turned around very quickly and within a decade as Indian companies started churning out Para IV submissions from the R&D facilities. For example ‘Eliquis’ saw more than 25 generic filings on day 1 with more than 60 per cent of those filed by Indian companies.

The writing was on the wall and strategy rooms of most of the pharma companies were busy figuring out how to maintain the growth which they achieved for years. They either had to continue focusing on the same markets with new and challenging products or find new markets which would provide the required momentum. At this point, the discussion of opening new markets started gaining steam. The ideal choice for the next wave of markets should have the following characteristics to support the ongoing growth trajectory –

– Big enough and growing markets to support the high-volume capacities developed

– Above average per capita income and spending capacity

– Willingness to accept affordable generics over innovator drugs

– Entry barriers should not make it impossible to do business

Well, there are not many countries on the map which fit in the above requirements. Our assessment suggests that the countries which fit in this list are Japan, Brazil, Mexico, South Korea and Taiwan. Unfortunately, there is no common factor linking them and all of them have their own unique dynamics. The only common thing is that it takes years together for an outside company t